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European stock markets mixed as US jobs disappoint

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·Contributor
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Muhlenberg, PA - August 26: A help wanted sign that reads
Economists had predicted a jump of 613,000 private sector payrolls this month, following two months of strong growth in the official non-farm payroll figure. Photo: Ben Hasty/MediaNews Group/Reading Eagle via Getty Images

European stocks pushed mostly higher on Wednesday, taking their initial lead from a positive session in Asia but slipping in the afternoon after the US added less jobs than forecast.

In London, the FTSE 100 (^FTSE) closed 0.4% up, with mining being the only sector to struggle after metal prices took a hit. Investors instead showed more interest in the oil and gas sector where commodities prices were stronger.

The French CAC (^FCHI) headed 1.2% higher but the DAX (^GDAXI) was 0.2% down in Germany after a positive start.

The rise in London came as UK retail prices climbed 0.4% in August compared to the previous month, with further hikes likely in the run up to Christmas amid growing demand for shipping and raw materials.

The British Retail Consortium (BRC), which conducted the research, said: “There are some modest indications that rising costs are starting to filter through into product prices.

“Food retailers are fighting to keep their prices down as much as possible, but mounting pressures mean this will not be sustainable for much longer, and food price rises are likely.”

Read more: Shop prices rise amid driver shortages and Brexit red tape

Meanwhile, UK house prices jumped by 2.1% last month — the second-largest gain in 15 years. This follows a subdued 0.6% rise in July.

The annual pace of growth accelerated to 11% from 10.5%, figures from Nationwide Building Society showed.

“We’re simply not seeing the market decline that many expected, both as a result of the stamp duty holiday being phased out, and the wider economic influence of increasing unemployment levels,” Colby Short, founder and chief executive of GetAgent.co.uk, said.

“This is undoubtedly due to the continued imbalance between current demand and the level of stock available to satisfy the appetite of the nation’s homebuyers. While these two factors remain out of kilter, house prices will continue to climb.”

Read more: End of stamp duty holiday hits UK mortgage approvals

Across the pond, the S&P 500 (^GSPC) rose 0.2% to another record high, and the tech-heavy Nasdaq (^IXIC) gained 0.7% after opening. The Dow Jones (^DJI) was 0.1% down as markets closed in Europe. 

It came as US private firms hired just 374,000 more workers in August, far less than expectations. Economists had predicted a jump of 613,000 private sector payrolls this month, following two months of strong growth in the official non-farm payroll figure.

Andrew Hunter, senior US economist at Capital Economics said: "Admittedly, the details show that the slowdown in private employment growth over the past couple of months has been driven mainly by leisure & hospitality, education & health and “other services”, which would be consistent with the idea that rising virus fears are prompting consumers to avoid high-contact services again.

"That said, the high-frequency activity indicators and the initial jobless claims data suggest there has only been a modest slowdown in the pace of recovery, although the sharp declines in measures of consumer confidence are a little more disconcerting."

The dollar inched back from three-week lows, as worries about slowing global growth in several markets returned to weigh on traders' minds.

The Nikkei (^N225) surged 1.3% overnight on the back of data that showed that Japanese companies' capital spending rose in the second quarter, the first such increase since the pandemic began.

The Hang Seng (^HSI) rose 0.5% and the Shanghai Composite (000001.SS) ended 0.6% higher. The rise in Chinese blue chips came despite worries about slowing growth in China, with China's battered tech stocks back on the rise.

Watch: What are SPACs?

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